BLOOMBERG: HOA V BOA: Homeowner Associations Step Up the Pressure on Banks



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Homeowner Associations Wake Up to Collections and Profit!!


EDITOR’S COMMENT: Becker and Poliakoff in South Florida is probably the largest law firm representing homeowner associations in the U.S. Once upon a time I was a competitor in Florida when I represented several hundred associations. It was Becker, Poliakoff and Streitfeld until Jeffrey Streitfeld went on the Bench to become a Circuit Judge — and I might add, one of the best.

Some time ago I predicted that homeowner associations would wake up to the realities:

  1. The banks have a strategy where they don’t officially take responsibility for the property until they are forced to do so. They do this because they don’t want to pay HOA dues, maintenance and special assessments. They also avoid taxes sometimes, but that is a different  ball of wax. 
  2. Associations are realizing that they have rights to collect on homes where the homeowners dues, maintenance payments and special assessments have not been paid while the bank is the de facto owner of the property. 
  3. In many cases, when confronted with an aggressive and knowledgeable law firm, long steeped in HOA matters, the bank simply folds, pays up and everyone goes on their way. But in other cases, the bank still drags their feet leading to both a solution and an opportunity for the association: FORECLOSURE ON THE BANK. And Becker and Poliakoff and other attorneys representing associations have caught onto the fact that there is money in those mountains of paper. 
  4. As shown below, foreclosing on the banks not only recovers money where the bank finally pays up, but actually results in the sheriffs sale of the property at a legitimate auction in which the association need only bid the amount of its lien. Some people don’t realize that the lien of the association for unpaid dues, maintenance or special assessments is a perfected lien, if filed properly, and subject tot he exact same foreclosure process as any mortgage.
  5. When the bank pays, they pay interest, costs of filing, and attorney fees, which is a big ouch.
  6. When they don’t pay, the association gets a declaration from the Judge that the property is owned de facto by the bank, and then enters a final judgment of foreclosure, which results in the sale.
  7. If the Association is the winning bidder, they get the house. So if the unpaid dues are $10,000, the association gets it. And if the house even in a down market is worth $80,000, the Association turns around, sells the property at an attractive distressed price, nets $70,000 which can do a lot to correct their budget and to wash out the unpaid assessments on that particular condo, town-home, coop or HOA dwelling unit. There are some wrinkles here, but I don’t want to give the banks any help.
  8. This is why I have suggested that distressed homeowners actually partner with the associations in the foreclosure of their own home. Under the right configuration of facts and documents and pleadings and judgment, the homeowner can strip the mortgages (which are probably invalid anyway) as an encumbrance on their residential dwelling unit. The homeowner can exercise a right of redemption after the foreclosure sale eliminated the non-creditor pretender lenders from the title chain, pay off the HOA balance, and start paying dues, maintenance and special assessments. I suspect that Becker and Poliakoff is headed exactly in that direction and I applaud them for it.

Homeowner Associations in Need of Cash Sue to Force Foreclosures

By John Gittelsohn – Aug 23, 2011 9:01 PM MT

Ben Solomon, an attorney with Association Law Group, left, and Jane Losson, a board member of the Vintage East Condominium Association, stand for a photograph in Miami Beach, Florida. Photographer: Mark Elias/Bloomberg

Ben Solomon, an attorney with Association Law Group stands for a photograph while Jane Losson, a board member of the Vintage East Condominium Association, talks on the phone in the kitchen of repossessed unit in Miami Beach, Florida. Photographer: Mark Elias/Bloomberg

Members of the Vintage East Condominium Association in Miami Beach got tired of waiting for JPMorgan Chase & Co. (JPM) to foreclose on unit 9, so they sued the bank in February to take control of the property.

In June, more than four years after the owner stopped making payments, a judge ruled that JPMorgan lost its claim to the $144,000 mortgage. The apartment is now on the market for $87,500, and the association may stave off insolvency with proceeds from the sale and a new owner who pays monthly dues, said Jane Losson, a board member at the complex. Four of the 11 other owners at the property are also behind on dues.

“I find it an outrage that the bank had decided to do nothing and the other owners got stuck,” Losson, who’s had her Vintage East condo since 2004, said in a telephone interview. “If we get this unit sold, we’ll have a little money.”

Financially troubled condo associations are taking banks to court as foreclosure delays enable delinquent homeowners to stay in their buildings for years, often without paying dues that keep boards running. The groups start by pressuring lenders to speed up home seizures and take over payment of the monthly fees. In extreme situations, like the Vintage East case, associations may force banks to give up rights to the property.

“The lenders are stalling foreclosures,” Ben Solomon, the Miami Beach attorney for the Vintage East association, said in a telephone interview. “Our complaints say the banks abandoned their interest and either need to accept responsibility for the title or walk away.”

‘Mortgage Terminator’

Solomon, whose Association Law Group represented homeowner boards in 16 Florida counties with 15,000 delinquent owners, also won what he calls “mortgage terminator” lawsuits in claims against Bank of America Corp. (BAC), Citigroup Inc. (C), Deutsche Bank AG (DB) and Wells Fargo & Co. (WFC), according to court records.

About 60 million people, or one in five Americans, live in residences with condo or homeowner associations, according to the Community Associations Institute, a trade group in Falls Church, Virginia. States with some of the highest foreclosure rates — Florida, Nevada, California and Arizona — are also among those with the biggest share of populations in homeowner associations, said Frank Rathbun, spokesman for the 30,000- member trade group. The associations maintain residents’ common interests such as parking lots, roofs, landscaping and trash removal.

“About 50 percent of our members said the housing crisis and economic downturn have had a severe or serious impact on their association,” Rathbun said in a telephone interview.

Pushing Banks

About one in three Californians live in that state’s 45,000 condo and homeowner associations, said Kelly Richardson, an attorney who specializes in homeowner association law.

“Banks have been slow catching up to reality,” Richardson, with the firm of Richardson Harman Ober PC in Pasadena, said in a telephone interview. “When pushed, they’ll step up to the plate, but you have to push them.”

In Nevada — the state with the highest rate of foreclosure filings, according to RealtyTrac Inc. — delinquent homeowners owe associations about $150 million in back dues, said Steven Parker, president of Red Rock Financial Services, which collects debts for associations in Nevada and five other states.

“It’s probably at least $1 billion for the whole country,” Parker, whose company is a unit of FirstService Corp. (FSV), said in a telephone interview from Las Vegas. “Prior to foreclosure, we get almost nothing from banks. After the foreclosure, probably 30 percent of what we’re collecting is from banks.”

Drop in Foreclosures

U.S. foreclosure filings — notices of default, auction or seizure — fell to their lowest level in almost four years in July, as lenders and government agencies increased efforts to keep delinquent borrowers in their homes and paperwork delays slowed repossessions, RealtyTrac reported Aug. 11.

Filings have plunged for 10 straight months after state attorneys general began probing a practice known as “robo- signing,” in which lenders and servicers pushed through default documents without verifying their accuracy. The decline has been steepest in Florida and other so-called judicial states that require courts to approve foreclosures.

The bank delays have left homes in the delinquency process longer. U.S. homeowners facing foreclosure averaged 587 days without making a mortgage payment in June, up from 251 days in January 2008, according to Lender Processing Services Inc. (LPS), a real estate information company in Jacksonville, Florida.

Florida Delinquencies

In Florida, where 14 percent of homes with a mortgage have a foreclosure notice, the average delinquent borrower hadn’t made a payment for 719 days, or almost two years, LPS data show.

As of June 30, 18.68 percent of home loans in Florida were more than three months delinquent or in foreclosure, the most of any state and more than double the U.S. average of 7.85 percent, the Mortgage Bankers Association reported this week.

“Florida’s numbers continue to drive national numbers,” Jay Brinkmann, chief economist of the Washington-based trade group, said at an Aug. 22 news conference.

Banks often hold off on a foreclosure as long as they can to avoid paying dues, property taxes and occupancy costs, said John Rickel, chief executive officer of Association Dues Assurance Corp., a St. Clair Shores, Michigan, company that collects fees for community associations in 20 states.

“We probably have 100 to 300 banks that we’re trying to collect from right at the moment,” Rickel said in a telephone interview. “We’re always 100 percent successful in collecting against banks because they do have the funds available.”

Limiting Collections

Associations’ rights vary based on state law. In Nevada, the groups have “super priority,” which means they can collect up to nine months of back dues plus costs when a residence sells, even after a foreclosure. In other states, such as Arizona, homeowner associations can sue to garnish wages of delinquent residents, even if they have lost the property.

Florida law limits homeowner associations from collecting more than 12 months of back dues or 1 percent of the outstanding mortgage, whichever is less, after a foreclosure. That cap often doesn’t apply to banks, said Frank Silcox, president of LM Funding LLC, a Tampa, Florida-based company that advances cash to condo associations in exchange for the lien rights on past- due accounts.

“Our attorneys look for a reason the foreclosing bank isn’t entitled to the minimum,” Silcox said in a telephone interview. “Nine out of 10 times, we get the bank to pay.”

In one Miami Beach condo case, LM Funding collected $52,000 — counting late fees, 18 percent interest and collection costs — instead of about $3,000 the bank would have paid under the state limit, he said.

$148,000 in Dues

About 40 percent of LM Funding’s collections come from banks, with the balance from individual homeowners and through short sales, when the lender agrees to sell a property for less than the mortgage balance, Silcox said.

Bonnie Jordan, manager of the Bermuda Dunes Condo Residence Association in Orlando, said LM Funding advanced her $150,000 and recovered an additional $148,000 in back dues, helping the 336-unit development pay its bills after owners of 115 units went into foreclosure.

“We had $375,000 in bad debt,” said Jordan, whose complex charges monthly fees of $250 to $357. “LM Funding is recouping every dime for us.”

While banks present a potentially lucrative source of delinquent dues, they’re also a challenging target because they use legal tactics to prolong the foreclosure process, said Ellen Hirsch de Haan, an attorney with Becker & Poliakoff PA in Clearwater, Florida, who represents homeowner associations.

Canceling Hearings

“The banks are setting and then canceling hearings before the final judgment is eventually entered,” she said in an e- mail, “then setting and canceling the sale date, then failing to record the certificate of title, thereby postponing the actual transfer of title to the bank for months, or even years.”

Bank of America, with 1.1 million mortgages at least 90 days delinquent, addresses non-performing loans as fast as possible while complying with the law, Jumana Bauwens, a spokeswoman for the Charlotte, North Carolina-based bank, wrote in an e-mail. Bank of America loans in which borrowers were at least three months late were valued at $32.5 billion as of March 31, up from $26.97 billion a year earlier, according to Federal Deposit Insurance Corp. data compiled by Bloomberg.

“After exhausting all home-retention efforts, it is in the best interest of servicers and investors to move the foreclosure process along while abiding by Florida laws,” Bauwens said in the e-mail. “On average, homeowners are delinquent 18 months prior to a foreclosure sale. In judicial states like Florida, the process is longer.”

Bank Trustees

To compel banks to act, Solomon’s lawsuits start by suing the homeowner for unpaid dues as a way of seeking title to the property. Then he files a claim against the bank, contending the non-performing loan restricts the association’s right to sell the property because the mortgage is worth more than the home.

The bank defendant is usually a trustee for the loan that was sold into a mortgage-backed security, a legal structure that can leave the party responsible for a mortgage unclear.

Citigroup and Deutsche Bank declined to challenge lawsuits brought by Solomon because both banks were trustees, not the servicers of the delinquent loans, bank representatives said.

In March 2010, Citigroup lost a lawsuit over a Miami Beach condo with a $136,000 mortgage, according to court filings. Danielle Romero-Apsilos, a spokeswoman for the New York-based bank, declined to comment, saying Citigroup wasn’t the servicer.

Deutsche Bank

Deutsche Bank in September forfeited its right to a unit with a $149,300 mortgage to the Palm Aire Gardens Condominium Association Inc. in Pompano Beach, Florida.

“Litton Loan Servicing, the loan servicer for the loan, and not Deutsche Bank as trustee, was responsible for all foreclosure activity relating to the loan,” John Gallagher, a Deutsche Bank spokesman in New York, said in an e-mail.

Donna Marie Jendritza, a spokeswoman for Litton in Houston, declined to comment on the lawsuit, citing privacy restrictions. Litton, which Goldman Sachs Group Inc. is selling to Ocwen Financial Corp., wasn’t named in the complaint or other court documents.

“We sue whoever holds the mortgage,” Solomon said. “The bottom line is the bank had a loan and the mortgage got terminated.”

No Defense

Palm Aire Gardens also won title to a unit with a $184,410 mortgage after Wells Fargo failed to mount a defense because it no longer owned the loan, a transfer that wasn’t reflected in property records, said Tom Goyda, a spokesman. The bank would have defended the mortgage if it hadn’t sold the loan, he said.

The San Francisco-based bank had $9.6 billion in mortgages more than 90 days delinquent and $11.4 billion in non-performing mortgages on one- to four-family homes as of June 30, Goyda said.

JPMorgan, the lender in the Vintage East case, had $2.5 billion in second-quarter costs tied to faulty mortgages and foreclosures, it reported July 14.

“There have been so many flaws in mortgages that it’s been an unmitigated disaster,” Chief Executive Officer Jamie Dimon said in a conference call that day. “We just really need to clean it up for the sake of everybody. And everybody is going to sue everybody else, and it’s going to go on for a long time.”

Vintage East

Thomas Kelly, a spokesman for JPMorgan in Chicago, declined to comment on the Vintage East lawsuit or other cases in which the bank lost properties to homeowner associations.

The bank’s mortgage at Vintage East was on a studio apartment with $24,000 in unpaid back dues, said Losson, the board member. Other residents of the Art Deco complex, built in 1937 two blocks from the beach, loaned the association money to pay for roof and building repairs and wrote personal checks to cover insurance payments, she said.

“We’re still in precarious condition, but we can see our way out now,” said Losson, who estimated the condo association was owed $60,000 in delinquent dues. “We went up against JPMorgan Chase and we won. It’s a good story. There’s a way out of the morass.”

To contact the reporter on this story: John Gittelsohn in Los Angeles at

To contact the editor responsible for this story: Kara Wetzel at

33 Responses

  1. […] BLOOMBERG: HOA V BOA: Homeowner Associations Step Up the Pressure on Banks MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Homeowner Associations Wake Up to Collections and Profit!! FORECLOSING ON THE BANK!! EDITOR’S COMMENT: Becker and Poliakoff in South Florida is probably the largest law firm representing homeowner associations in the U.S. Once upon a […] […]

  2. With regards to : Homeowner Associations Wake Up to Collections and Profit!! ”

    Quick Points ” the HOA didn’t win anything from chase! The Value on the CONDO UNIT was between $20-$30k, and the Unit was liened out for over $16k.

    Do the Math!

    The Bank gave the unit to the HOA because its worth ZERO! Why would they spend $1000’s the litigate over a worthless property? There was no great LEGAL WIN by SOloman, who DID NOTHING.

    Furthermore, HOA’s dont foreclose on TITLE with Negative Equity property. If they do, the HOA HAS TO PAY THE TAXES,HOA DUES, INSURANCE, all Upkeep which is make the whole event a DUMB MOVE by the HOA..

    Notice in this event, the HOA DID NOT FORECLOSE ON ” TITLE “! WOnder why?

    Lastly, The association got a unit they cant sell because TITLE IS CLOUDED! If title cant be insured, then its basically unsellable. Neil G knows this, so I dont know why he published this garbage without all the FACTS, with all due respect.

  3. Mortgage Services affiliates of natonal banks are selling and reselling real estate owned REO properties as fast as they can. A 90 day default allows ‘Servicer’s subservicers to sell debt – hello – paying attention and seller c/o Wells Fargo Bank NA is just a REO Broker c/o new Temporary lender ‘Wells Fargo Bank NA’ who sells REO property to new subservicer who advances funding c/o GMAC Mortgage and deals with DLJ Capital Mortgage – Chase – FNBC Trust Co. …

    ForeclosureGate has resulted in what changes in filings of foreclosures? I don’t expect Wells Fargo Bank NA will do same old we speak about in public domain. .

    Who has a foreclosure filed this year?

    Has the process changed? Are they still using the robo-mills and filing falsified documents with County Colerk/Recorders? Or are they doing the Assignments first selling the properties c/o REO LENDER – Brokers right away, able to claim these future ‘loans’ will be placed inside Freddie Mac Institutional investors portofiliws shelfs CMO’s …

    Do you know the name of the loan trust?

    Are you in hardship now and the Assignment not filed yet? Buy the report before they sell the loan so you can find out what trust the loan# and follow the movement.

    The assigment has to be filed prior to the complaint. Foreclosuregate was about not selling I mean not recording the Assignment before th complaint and if you don’t know who A Seller/Purchaser during origination, and you won’t know who B was during period loan was performing if they file new Assignment reselling collection rights, jumping to C. D is the resale of the loan c/o same pipeline perfecting title hiding all the defects, foibles, wrarts, ugly nasty dirty financial bomb which blew up the economy, third element of our national security, harmed the nation and our Commander In Chief NOT ALLOWED TO DO NOTHING ABOUT THAT.

    What goes there Neil from your data FOR ITS ALL IN THE TRANSACTIONS. CAN YOU REVEAL what percent Freddie Mac/Fannie Mae 2008, 2009, 2010, 2011 AND PERCENT CHANGESINCE Foreclosure Gate from the securitization audits.

    Or for that matter, since consumers do not have accurate business statements, nor documents,nor the name of the real creditro, will they just simply falsely claim ‘Freddiemac – eFanniemae loans and as institutional investors owner/servicer they laugh all the way to the national bank – without evidence there is not a dammn thing anyone will be able to do.

    Get evidence in accorance with court which must be acceptable under civil procedures as defined in each Court of Equity, etc. and describes procedures and when evidence introduced (not at the beginning) but at the right time in accordance with civil procedure you move the court with certified experts not just certified on paper but in testimony.

    They are selling the properties fast and furious and assignment promissory notes that will appear as if the ‘Seller’ of the Loan has Standing. Remember the Seller of the Loan c/o Mortgage Servicers affilaites of national bank is not the note holder in due course – the CREDITOR – The Purchser of the mortgage backed note.

    Put yourself and your evidence in the hands of the judge – pretend you are the juge – is the evidence acceptable to the Judge – the Court is it acceptable to prove the party does not have Standing ?

    Foreclosure is process by which ‘Servicer’ trying to take possession of property and the attorney as Plainiff does not have pesonal knowledge and does not represent all of the parties listed on the ‘complaint’ and none of them have ‘Standing’ as Note Holder in Due Course to take property ? The ‘seller’ of the loan c/o REO LENDER the new Temporary Lender c/o REO BROKER affiloate of PASREO Premier Asset Services affiliate of Wells Fargo BanK NA the only affiliation a commercial credit line pre-approved by Wells Fargo BankNA the small business REO Broker/Owner/Agent will operate as a commercial entity and purchases from Seller Wells Fargo Bank NA the REO property and Wells Fargo Bank NA will claim once sold they have nothing to do with the transaction, won’t reveal again the CREDITOR, will the CREDITOR Assign the sale for the REO amount? and just attach the deficiency to you another burden on your back and statutory taxes not paid to County Clerk!
    Hello, under FDCPA is there notthing nothing nothing we can do about that? Happening today in MD, State Attorney General MD you know GMAC Mortgage Corp equity partner in HOPE LoanTrust … nothing we can do about the fact they said they sold you your foreclosed property for $10K and lied and are reattaching deficiency! Hello.

    All national bank affilaites information is proprietary per US Code OCC visitorial powers will not allow any info to be released related to Mortgage Services affilaites c/o national banks! Hello anyone getting this?

  4. cubed2K agree
    financial products to sell ‘cash’ in public domain to consumer as debt
    purchaser gives cash to seller of loan, the originators, depositor deposits the cash the consumer gets the financial product ‘loan’ mortgage promissory note and signs with the Nominee c/o Assigns and/or successors we signed mortgage-backed promissoyr note with the Mortgage Servicers’ affiliate c/o’Tempoary Lender’ Bank Closing Agent who accepted cash from Purchaser. Purchaser is that person none of you know because you don’t have copy of the ‘real’ exchange of cash with the real Non-Deposit Trust Company Non-Member c/o Institutional Investors Bank the ‘cash’ attached (has to be attached) to a Mortgage Servicers’ affiliate in order that the money ‘cash’ transactions sale and purchase did not have to be recorded with FinCEN under Patriot Act 2001 OCC 2002 Visitorial Powers Supremacy Clause EXEMPTS all ‘cash’ attached to Mortgage Servicers’ affiliates don’t have to record all the cash moved through alternative investmeents and Alt-A Loans. You did not ask for an Alt-A Loan but your loan no matter how good your credit at the time was Alt-A BECAUSE Mortgage Services affilaite input data so there would be (1) non-conforming fact and they could ‘charge you more’ and make more money in the Alt-A pipeline in which all loans sold and purchased were attached to alternate investmeents 1-90 days after you signed the mortgage promissory note c/o Mortgage Servicers Affiliate RETAIL.

    That is a fact

    All products placed into public domain for consumer consumption are to be free of defects at the time of purchase.

    Hello all the great legal minds out there, consumer’s sold defective ‘financial ‘ products c/o financial services at time of sale, and the products manufacturer ‘loan trust’ ‘Seller’ Originator Depositor Norwsest Corp, GMAC-RFC and Chase Manhattan Mortgage responsible as ‘Originators’ as Depositor selling ‘loans’ taking consumer properties by egregious acts – take possession of property by deceptive acts larceny and the products defects at time of sale caused substantive harm to consumer’s through non-disclosure also known as SUBSTANTIVE omissions of material facts Mortgage Services; for example.

    US prints cash which is debt. We are sold ‘cash’ if we don’t own the cash we purchased a financial product that was supplose to be safe from defects, consumers not expected to pre-examine financial products for defects, all of the ‘Federal Government’ Regulatory Agencies our hard earned money pays taxes to pay these regulators and Congress both Houses and …. do NOTHING to protect you or me or the economy of the United States of America in which the Federal Reserve with control of OCC since 2006 under US CODE prevents you nad I and every resident and citizens and person harmed from being protected by State AttorneY Generals with authority to enforce Consuemr Protection Laws if but not for the OCC Supramacy Clasue 2002 and Exemption all Mortgage Servicer Affilaites c/o National Banks ‘Exempt’ from the law may engage in alleged unlawful business acts every affilaite – every REO broker buying properties at Sheriff sales using name of Wells Farog Bank NA Seller as Temparoy Lender with REO Broker/Lender c/o Premier Asset Services PASREO for example.

    Get good and mad and lets all figure out how you will get the documents during Originatnion that reveal the ‘seller’ and purchaser of the loan and during default the new subservicer contracted for the default is not the servicer you are calling who you paid your mortgage payments too.

  5. HELO’s are unsecured debt and they resell debt after 90 days can Master Servicer swap non-performing loans with REO properties using Prefunding to purchase reo properties – debt written off purchased …..
    So many since Foreclosure Gate – new method of foreclosing and not rrust

    They will claim Freddie/Fannie owner of loan and 2010 US Code codefied law so all info ‘proprieatry’ to circumvent discovery since 2009 Cumo v ClearingHouse win ‘State Attorney Generals may enforce Consumer Protection Laws…. unless you have evidence …. how will you prove where loan was no longer will reveal when they file assignments

    Get what trust am I in – is it too late?
    Get David Kriegers COTA!
    Get ready for Civil War in Court
    Watch credit reports
    Watch County Clerk / Recorder documents
    Watch closely….
    Evil surrounds us
    Want to be safe in life and property – think like they do – how do they circumvent legal system

  6. that last post you posted Nancy is why they do not want to cut the ties from Wall Street. So home mortgages can be traded on Wall St. This is why Obama said he looks forward as E Tolle posted. They do not want to go back to putting back in the glass-steagall. There never is any mention of it in the news. And that is the solution, to put back in glass steagall.

  7. You know Nancy Drewe,

    on your below post I quote this:

    “A direct lender should know their products inside and out”

    Well, lets get something straight here. These yahoos in Financial Markets have latched onto the term “PRODUCTS”.

    Let’s get something straight here, money is not a PRODUCT. It is a medium of exchange………………

    It is what most people BELIEVE.

    Here we go again changing the words to fit the financial marketing scam artists.

    This is the definition of PRODUCT:

    1. A good, idea, method, information, object, or service that is the end result of a process and serves as a need or want satisfier. It is usually a bundle of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers to a buyer for purchase.

    2. Law: A commercially distributed good that is (1) tangible personal property, (2) output or result of a fabrication, manufacturing, or production process, and (3) passes through a distribution channel before being consumed or used.

    3. Marketing: A good or service that most closely meets the requirements of a particular market or segment and yield enough profit to justify its continued existence.


    Here it is really:

    A financial product is another term for financial manipulation, or cooking the books if you want to get down to it, it’s a term to actually describe scam.

  8. Who Benefits from B of A Exiting Correspondent?

    It’s now official: Bank of America has told the world that it’s throwing its correspondent lending division overboard. Top managers in the group received word this morning. Of course, the news was inevitable. When B of A mortgage executive Doug Jones departed the megabank back in late May for the much smaller PennyMac the industry sensed that it was just a matter of time. (Jones was hired to grow PennyMac’s correspondent unit from scratch.) Now the question begs: with B of A getting out, which firms will fill the void? According to the Quarterly Data Report, firms growing their correspondent business the most in 1Q include: CitiMortgage, U.S. Bank Home Mortgage, and PHH Mortgage. When one door closes, another opens…

    There are 3 basic types of originators :

    1.A Direct Lender
    2.A Broker
    3.A Correspondent Lender
    Each of these originators has their own benefits and drawbacks.

    A direct lender should know their products inside and out. The direct lender underwrites its own loans and provides the funds at closing. They also may offer loans that they will be servicing, thus they don’t have to conform to the standards for loans being sold on the secondary market. The biggest drawback is that they are limited to the products and efficiency of only their company.

    A broker has access to several different lenders and thus may offer a vast array of products. They are able to pick the lender with the best turn times, best rates, and may place the customer with the lender that offers the best fit. A broker relies on the lender to underwrite and fund the loan. The drawback comes into play with inexperience. With access to so many products, sometimes an overlooked detail can cause a loan to be rejected by a lender.

    A correspondent lender has access to several “investors”, that are normally the same lenders that a broker could have access to. The correspondent lender underwrites the loans to the standards of the investor and provides the funds at close. The same drawbacks a broker has apply to a correspondent lender.

    A correspondent lender is a mortgage lending institution that typically lends money on a mortgage loan, and then sells that mortgage loan to another lender once the loan is closed. There are many variations of a correspondent lender, but the most common is a mortgage banking firm that operates off of a warehouse line. Being a mortgage banker means that the company underwrites and approves their own loans, and lends the money being borrowed. This differs from a mortgage broker, who simply arranges the financing for the borrower, and does not actually lend any money. Bankers are typically financed through a warehouse line of credit. This is essentially a very large (for several million to tens of millions of dollars) line of credit that is used to fund their lending.

    An example would be as follows: Joe Borrower completes a mortgage application with a correspondent lender, that lender approves the loan for $200,000. At closing, the lender wires $200,000 from their line of credit to the escrow or title company, and Joe Borrower buys the house. The lender will now take the completed signed mortgage loan, and sell it to a bank or investor, for $200,000 (or more if it is profitable); they will then take that $200,000 and pay down the line of credit.

    A correspondent lender can vary greatly in size. It could be a company as small as 10-15 employees, with a small line of credit operating in only 1 or 2 states, or it could be a company of several thousand employees operating in all 50 states. Little changes behind the way the operation works, only the size and scale of the operation would be different. Likewise, a correspondent lender may have a relationship with 1 or 2 banks, or 30 or 40 banks, with the ability to lend according to any of their guidelines. This will also vary depending on the individual correspondent and their set up.

    As a generalization, a mortgage banker or correspondent lender can be more flexible than a regular bank, as they will have access to the programs of multiple banks. Correspondent lenders are regularly graded by their investors on the quality of loans that they are selling. This is because, unlike a broker, who arranges a transaction but has no ability to approve or deny a loan, a correspondent lender is approving their own loans. This gives them more freedom, but also more risk. If the lender approves bad loans, eventually they will either lose their investor relationships or their lines of credit, or both. Due to the recent credit tightening, some smaller, lower quality, correspondent lenders have begun to have difficulty maintaining large enough lines of credit to fund their loans, as warehouse lending facilities have contracted like all other types of credit.

    The final major differentiation between a correspondent lender or mortgage banker, and a servicing lender or bank, is that, while the correspondent will actually lend the money for the loan they will typically not accept monthly payments. Their job is to sell the loan to an investor before any payments are due, with the end investor or bank becoming responsible for collecting and processing payments. This is essentially what differentiates a mortgage banker and a bank that does mortgage loans. Mortgage bankers, as a general rule do not service the loans that they originate.

    A correspondent lender is a type of lending institution that has a secured tradeline from an investor- usually a direct lender – in which they funds loan from. Correspondent lenders differ from brokers because they employ their own underwriting staff, and funding coordinators, while brokers utilize the staff of the lender.

    Correspondents look to achieve volume. They fund as many loans as they can, with the goal of filling their tradeline. Bonuses and incentives are passed along when this is accompished (this is profit not consumer savings). At the end of the month, the closed loans are packaged, and delivered to the investor. The investor will review random cases out of the packaged files as a form of compliance, which usually pass, and operations continue. Brokers take advantage of correspondents because their timeframes are typically faster, despite the cost of rates usually coming at a slight premium in comparison the the direct lender that they have their tradeline from. Like banks correspondents are not required to disclose yield spread made (YSP) made on an interest rate.

    First State Bank
    Majority owned subsidairy MSI Mortgage Services III
    502 N. Hershev Rd, Bloomington IL 61704

    About Mortgage Services III, LLC!

    Mortgage Services III, LLC is a fresh face in the Mortgage Industry. With the financial security of bank ownership and an experienced and knowledgeable staff, MSI is positioned to provide you with a world class customer experience! MSI offers a well established Wholesale channel and has recently created a Nationwide Correspondent channel. The typical layers of management do not exist at MSI, which ultimately empowers your sales representative to form a true partnership with your company. Our corporate headquarters is based in Bloomington, IL with an additional operations platform in Oakbrook Terrace, IL.

    MSI specializes in a number of different loan programs…
    • Conforming
    • FHA loans (Title II including FHA Sponsorship!)
    • Adjustable Rate Mortgages (ARMs)
    • Rural Development
    • VA Loans

    MICRO News is back in the studio covering some BIG FHA information:

    •Streamline Refi clarifications (Extremely important-Please watch.)
    •Sponsored Originator options (Nice!)
    •DE/Authorized Agent options (The best of both worlds!)

    Fast Funding Tips
    8/9/2011 NLMS on all Corporate ID’s
    Streamlines with investors 1003’s FHM Refis’
    Initital 1003 no income figures listed
    Employer does need ot be listed
    Final 1003 need 1.00 or gross income

    Sponsored Originators/Authorized Agents 7/2011 FHA ID n

    Streamline Refi001003 should have no income figures listed in income schedule

    Final 1003 must have $1.00 or gross

    fnma 3.2 data upload to MSI Employer listed – no income

    FHA ID # conditional DE approval. Will purchase test case files
    Fund loan in your own name you wil be responsilbe for upfront MIP payment.

    Utilize MSI as authorized agent
    Seller act as Principal Originator
    MSI Agent or underwriting entity

    a) Close loan in own name
    b) obtain FHA case#
    c) obtain all applicable disclosures
    d) order appraisal
    e) submit upfront MIP Payment

    MSI underwriter would be responsible for insuring loan.

    Authorized Agency Agreement from DE Seller prior to submission to MSI of these loans

    Pre-foreclosure waiting period
    Important Non-FHA Info
    Considerations for properties with window security bars
    Clarification to our pre-foreclosure wiating period verbiage
    Reminders on recent and upcoming updates for DU and LP
    Experts at USDA

    MSI renegotiation policy – Save your loan –
    Keep your borrowers with a one time rate reduction

    Underwriting Turn Times
    As of 8/15/11
    Conventional Purchases 24-48 hours
    Conventional Refinances 48 hours
    FHA/VA 48 Hours
    USDA 48 hours

    MSI Strategic Partners
    -Genworth Financial
    AU Central-Automated Underwriting
    Lenders One A National Alliance of Mortgage Bankers

    Todd Carlson SVP Correspondent Lending Div
    Ben Freese Correspondent AE
    IL, IN, KY, MI, MO, OH, PA, WI
    Bob Travis Correspondent AE
    AL, GA, NC, SC, TN,
    Brooke Tyler
    Correspondent AE
    AR, IA, KS, LA, MI, MS, NE, ND, SD
    Terri Potter Correspondent AE
    AZ, CO, NM, NV, OK< TX, UT
    Opending Correspondent AE
    ID, MT, OR, WA, WY

    MSI – Mortgage Services III, LLC
    Correspondent Lending Division
    http : // www . msicorr . com / MSICorrResources . htm

    Read: tutorials, underwriting submission checklists, FHA and VA documents, appraisal ordering information, closing and funding documents, mortgage disclosures, trust checklists and final docs information. We have also moved Application Packages, Account Executive information and all of the correspondent lending announcements to the far right hand column.


    The Correspondent:
    Meets all of the eligibility requirements
    Is approved by MSI to sell loans to MSI
    Is in Good Standing with MSI
    – A financial institution o rMortgage Banker which is supervised or examined by a federal or state authority, or
    -Is a Federal Housing Administration ("FHA") approved mortgagee and/or
    – An approved Federal National Mortgage Assocaition ("FNMA") or Federal Home Loan Mortgage Corporation ("FHLMC") Seller/Servicer

    In accordance with the laws of te jurisdiction under which it was organized, the Correspondent:
    -Is Duly organized
    Is Validly existing
    -Is in Good Standing with all applicable investors, agencies and supervising entities and under the laws of the jurisdiction of its organization
    -Is qualifed to do business and has the corporate power and authority to perform its obligations under this Agreement.
    -Holds all applicable federal, or state or other licenses, authorizations or approvals, including, without limitation, the authoirzations and approvals of FHA, Department of Veterans Affairs ("VA"), FNMA, FHLMC or Government National Mortgage Association ("GNMA"), as are reasonable necessary to perform its obligations under the agreement

    AUTHORITY: The execution, delivery and performance of this Agreement (including all instruments of transfer ot be delivered pursuant to this Agreement) have been duly and validly authorized by all requisite action on the part of the SELLER and if the SELLER is a DEPOSITORY INSTITUTION, THIS AGREEMENT WILL BE MAINTAINED IN THE SELLER'S OFFICIAL RECORDS.


    BINDING OBLIGATION: THIS AGREEMENT IS THE LEGAL, VALID AND BINDING OBLIGATION OF THE SELLER, enforceable against it in accordance with its terms, except as such enforcement may be limited by applicable liquidation, conservatorship, bankruptcy, insolvency, rearrangement, moratorium, reorganization or similar debtor relief laws affecting the rights of creditors generally.


    NO CONSENT REQUIRED: No consent, approval, authorization or order or, registration or filing with, or notice to, any governmental authority or court is required (except with respect to the recordation of the assignment of the mortgages or deeds of trust) under federal laws, or the laws of any jurisdiction, for the executition, delivery and performance of, or compliance by the Seller with, contemplated hereby.

    continued page 6 of 28

    Want to 'understand' Correspondent Lending
    'Wells Fargo Home Mortgage' eCorrespondent Lending Div
    2701 Wells Fargo Way, Minneapolis MN

  9. Neils’ post is about HOA/ Condo Ass. What about some more feedback from the forum. Here is mine:

    Condo lawyers assume despotic powers. To say that all condo fees are genuine is the same as the lie that pretender lenders are bona fide creditors.

    We should first talk about how Condo Associations racked up their ‘losses’ most of which have nothing to do with people not paying their dues but with lawyers’ and their managers’ creating communal liabilities for private profit. These liabilities, such as expensive self-serving lawsuits or capital repairs initiated by condo lawyers and their managers, pushed people over the edge.

    Cause and effect: How else can you get someones’ property for free?

    Neil, please reconsider your support for the Florida King of Condo $#%&^$#@
    Here is why:

  10. where did that come from Anon?? i was discussing old credit card debt with cubed and you come way out of right field…no one was talking about mortgages or secured versus unsecured

  11. thanks mkd.

    In checking our annual credit report .com free credit report. Cap 1 listed the account as charged off.

    I will use that in my defense to the summons from the lawyer acting on behalf on Cap 1 as listed as plaintiff. We shall see. I also don’t care what they do as we, meaning myself and my wife, have BK as an option, so I don’t give a flying yahoo what they do. I am not going to just roll over. We are in a position that we have no assets, so I don’t care, I have nothing to lose as it is lost already, so

    those MOFO’s can suck my weenie. I also have all the time in the world and I am quite enjoying the game. I actually think it is quite exciting. One must remember to always be willing to experience anything, and I am. And since I am willing to experience anything I fear no consequences, or fear no evil. That would be key.

    And more importantly, I appreciate your response and data. So thank you.

  12. @ cubed2K

    Capital One plays dirty and I am sure you know that. You may also know that CapOne assigns the debt out for collections and usually does not sell the debt.

    Cap1 continued to assign my credit card debt out to collection agencies even though I was in BK. I remember NCO was the collection agency that was trying to collect on the account when I filed BK. NCO continued to call even after I gave them all the BK info. I was told that Cap1 was their client and the account was assigned to them. Atty sent both Cap1 and NCO letters regarding the violation of the BK stay. All was quiet for about 2 weeks, then Cap1 assigned the account AGAIN out to another collection agency. This collectioin agency aslo said the acct was assigned to them. Atty sent a strongly worded letter to Cap1 and that was the end of that. Received discharge. Cap1 sent us a 1099C for tax purposes. Who’s the plaintiff? Cap1 or the debt collector?

    cubed2K I do care.

  13. plastic demons I tell you

  14. note AMBAC is the NOTE INSURER for this auto finance trust:

  15. here, they make so much money off us suckers, what’s in your wallet becomes what’s in their wallet:

  16. and to even confuse the godamn matter even more, the CAP 1 credit card bank is just a servicer as it pools it’s accounts into ABS trusts. It’s even on their godamn website:

  17. so if you charge off the godamn debt, it’s gone. If you recover it, you have to count it again as income.

    So the godamn banks charge off a CC debt, file their IRS thingies, and that’s it. Then they sell the names with acct info numbers, amt’s, names to junk debt buyers. Banks count that as income.

    Now JDB’s have charge off debt. So if they collect money from some defaulted person, what ——-

    you telling me now those JDB’s are gonna pay some of the monies collected back to the original creditor or Cap 1 credit card company????????????? No, the debt was written off.

    I don’t think so. Cap 1 would have to count as income again.

    But, if Cap 1 assigned the debt to some debt collector and their deal was the debt collector gets 10% or 50% of that collected, now we FDCPA in full view and use.

    But Banks must declare CC debt not payed and charge off after 180 days of non-payment, their own rules.

    You tell me tnharry what rules, codes, laws are you following?

    It is the bloody glove I am hoping for…………..

  18. I disagree thharry. What codes or rules are you following on charged off debt?

    I posted earlier another response but Neil removed the post probably since I linked to the IRS website.

    Here it is again:

    There are two kinds of bad debts – business and nonbusiness.

    Generally, a business bad debt is one that comes from operating your trade or business.

    The following are examples of business bad debts (if previously included in income):

    Loans to clients and suppliers
    Credit sales to customers, or
    Business loan guarantees
    A business deducts its bad debts from gross income when figuring its taxable income. Business bad debts may be deducted in part or in full. You can claim a business bad debt using either the specific charge-off method or the nonaccrual-experience method.

    All other bad debts are nonbusiness. Nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially


    And this:

    Recovery of a Bad Debt

    If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. The amount you include is limited to the amount you actually deducted. However, you can exclude the amount deducted that did not reduce your tax. Report the recovery as “Other income” on the appropriate business form or schedule.

    See Recoveries in Publication 525 for more information.


    the above from the IRS dot gov slash publications slash p535

  19. Tnharry

    IT IS THE DIFFERENCE BETWEEN SECURED AND UNSECURED. And, false :”mortgage” presented to borrower — FRAUD.

    But — Tn — you clearly have a business interest that is contrary to homeowners saving their homes and exposing the fraud.

    You will eventually lose —just a matter of time. Maybe — at that point — you will ask for help to save YOUR home from the fraud.

  20. Charge off is not the same as forgiveness of debt. I’m sorry, but this isn’t the bloody glove you’re hoping for

  21. I meant to say this debt collector game is BS. And I’m gonna get to the bottom of it.

  22. Recovery of a Bad Debt

    If you claim a deduction for a bad debt on your income tax return and later recover (collect) all or part of it, you may have to include all or part of the recovery in gross income. The amount you include is limited to the amount you actually deducted. However, you can exclude the amount deducted that did not reduce your tax. Report the recovery as “Other income” on the appropriate business form or schedule.

    See Recoveries in Publication 525 for more information.


    Definition of Business Bad Debt

    A business bad debt is a loss from the worthlessness of a debt that was either:

    Created or acquired in your trade or business, or

    Closely related to your trade or business when it became partly or totally worthless……………………………..



    debt collectors buying written off debt are not debt collectors for another. They did not buy accounts receivables. They bought WRITTEN OFF BAD DEBT deemed UNCOLLECTABLE by the creditor.

    This BS. I’m gonna get to the bottom of this crap.

  23. “…Security investors fund the BANK — not the borrowers — there is no direct relationship between security investors and borrowers. If banks are able to sell their income stream, that is an accounting transaction — it is not a “loan” to borrowers. This is why security investors are NEVER the creditor.

    Collection rights transfers are not funded by borrower transactions (ie fabricated refinance). Collection rights are transferred by assignment — not NOTES (which is why NOTES are fake).”

  24. I’m waiting for the day when all those people find out the TRUTH of how they were ILLEGALLY FORECLOSED ON—or find out their “fake loan” was TOTAL FRAUD—and come back MAD AS HELL…
    Watch the fur fly…

  25. another case of bank v hoa…and the bank loses

  26. what’s the significance to the charge off? it’s still collectable by them or other entities

  27. Hahahha,

    pulled my free annual credit report on myself and my wife. All our accounts have been charged-off, even our second HELOC for 125k.

    Regards the summons my wife received for her CAP 1 CC and being sued. It’s charged off. The law firm is acting as a debt collector mill filing with the courts and serving a summons and hoping people don’t respond thereby getting a default judgement. Snakes I tell you. There are sharks in them there waters.

    hahahaha, I’m happy finding this out. Now to file my answer on the summons.

    I’ll keep yah informed not that anybody cares.

  28. @louise – what documents are you referring to that are so messed up?

  29. Forgive me for posting out of context but I need max exposure for this request:

    I need an attorney in far west Illinois .. contract dispute with damages
    I bought a LARGE property at auction 1.5 years ago.. auction contract said “contents not included”
    At closing the same contract (written by sellers lawyer) has been altered by omitting that phrase.
    Seller had a month to clean out property between auction and closing
    Seller has refused to work with me by simply insuring their workers
    I have damages of 1.5 years of loss of use and having been forced to warehouse their goods.. this is a 100,000 sq ft property and at $2/ft/year it’s significant..
    I have proposed to plaintiff that we settle and share proceeds of insurance settlement with lawyers E&O policy (lawyer that crafted bad contract) .. no answer yet

    Plaintiffs lawyer tried to win by not notifying me of a motion and hearing to create a default judgement.. I have gotten a second chance (judge has seen this lawyer pull that stunt previously) BUT HAVE LIMITED TIME

    Obviously much more ..

    brian_tracy AT

  30. […] Livinglies’s Weblog Filed Under: Foreclosure Law News, Foreclosure News Tagged With: crisis, foreclosure, […]

  31. Neil…. Thomas P. Dore’s so-called LE posse has been a frequent visitor to this homeowner since he filed suit against him…. and remember that same day I caught Maryland Office of State folks snooping on my Journal page AFTER he filed…. he finally got his summons today and told me he’s sent them Certified Mail to these clowns with a subpoena duces tecum on ZipCar….. Good work… keep you posted.

    foreclosure mill attorney Thomas P. Dore’s ignorant Goon Squad on the move, harassing homeowner:

  32. When you hire a lawyer to do work for you, one expects that they know what they are doing and will complete the documentation properly. All I can say is: I have never seen so many F%^&*d up documents all at once in my life. Take a good look at the FDCPA.
    Documents not prepared properly, not filed and recorded properly or missing all together. What do we need lawyers for if all the documents are a mess. I can tell you this: The Fair Debt Collections Practices Act is alive and well and applies to these terrible documents or lack thereof.

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